Cloud fuels Amazon, Microsoft and Intel, but best is yet to come

The quarterly results from Amazon, Microsoft and Intel show profits are certainly in the cloud, but with 5G just around the corner this might only be the start of a cloud renaissance.

Amazon’s AWS business unit grew 49% year-on-year, Microsoft’s Azure revenues shot up 93%, while Intel’s data centre group saw 24% jump compared to the same period 12 months ago. These are all very promising numbers, but when you considered the promises of 5G and the prospect of a more influential distributed cloud, it might be chump change.

5G promises increased and faster connectivity, as well as more cost efficient delivery, however a conversation which doesn’t seem to get much attention at the moment is the cloud. The more content users are downloading or accessing on the move, the greater the need for a more efficient and influential distributed cloud model. It might not be the most riveting aspect of the telecommunications world, but anyone associated with the cloud segment will clean up, if they aren’t making enough already.

That said, focusing on the here and now, Amazon is maintaining its position as one of the most influential companies on the planet. Net sales increased 43% to $51 billion in the first quarter, with operating income at $1.927 billion. Looking specifically at the cloud business, net sales stood at $5.442 billion, an increase of 49% year-on-year. This figure now accounts for roughly 11% of total revenues at Amazon, while operating income stood at $1.4 billion. Amazingly, 73% of all operating income at the technology mammoth came from AWS.

“AWS had the unusual advantage of a seven-year head start before facing like-minded competition, and the team has never slowed down,” said Jeff Bezos, Amazon CEO. “As a result, the AWS services are by far the most evolved and most functionality-rich.”

AWS might have had a running start at the industry, but it is not alone in fighting for profits in the cloud. Sitting in the number two spot is Microsoft, with its Azure platform making some very promising headway in the space.

Total revenues across the Microsoft business was $26.8 billion, a 16% year-on-year increase, with the Intelligent Cloud unit contributing $7.9 billion, up 17%. In the cloud business, Azure revenue growth was 93%. AWS is still the leader in the cloud world, but Microsoft must be chipping away at that leader with consistent quarterly growth in the 90s.

“Our results this quarter reflect the trust people and organizations are placing in the Microsoft Cloud,” said Satya Nadella, CEO of Microsoft. “We are innovating across key growth categories of infrastructure, AI, productivity, and business applications to deliver differentiated value to customers.”

Over the course of the quarter, Microsoft invested around $3.5 billion in capital expenditure, a notable chunk of which would certainly have been on enhancing the cloud business. While the cloud can be a very profitable game, it isn’t cheap to set up. Google have also confirmed this after spending $7.67 billion, both companies demonstrating substantial increases from the year before, with companies like Intel claiming the rewards.

The cloud is incredibly influential now, and will only become more so. Intel’s dominant position when it comes to chips in the data centre makes it looks like a good bet for any market speculators. Total revenues across the company were up 13% year-on-year to $16.1 billion, while the Data Centre Group brought in $5.2 billion, a 24% boost. Share price was up 7% since the announcement, with the future looking very rosy.

These are all companies making quiet waves in the technology world, but with 5G, bigger and better things could be on the horizon. Our insatiable appetite for data and connectivity will continue to fuel momentum for the cloud players. They might not be the sexiest aspect of the telecommunications segment, but certainly the ones with some of the most interesting prospects moving forward.